How Wide Is the Border?

Charles Engel and John Rogers

American Economic Review, 1996, vol. 86, issue 5, 1112-25

Abstract: The authors use CPI data for U.S. and Canadian cities for fourteen categories of consumer prices to examine the nature of the deviations from the law of one price. The distance between cities explains a significant amount of the variation in the prices of similar goods in different cities, but the variation of the price is much higher for two cities located in different countries than for two equidistant cities in the same country. The authors explore some of the reasons for this finding. Sticky nominal prices appear to be one explanation but probably do not explain most of the border effect. Copyright 1996 by American Economic Association.

Date: 1996
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Related works:
Working Paper: How wide is the border? (1995)
Working Paper: How wide is the border? (1995)
Working Paper: How Wide is the Border? (1995)
Working Paper: How Wide is the Border? (1994)
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